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Hedge Fund Darlings vs. Altice USA, Inc. (ATUS) In 2019

It has been a fantastic year for equity investors as Donald Trump pressured Federal Reserve to reduce interest rates and finalized the first leg of a trade deal with China. If you were a passive index fund investor, you had seen gains of 31% in your equity portfolio in 2019. However, if you were an active investor putting your money into hedge funds’ favorite stocks, you had seen gains of more than 41%. In this article we are going to take a look at how hedge funds feel about a stock like Altice USA, Inc. (NYSE:ATUS) and compare its performance against hedge funds’ favorite stocks.

Altice USA, Inc. (NYSE:ATUS) was in 51 hedge funds’ portfolios at the end of September. ATUS investors should pay attention to an increase in hedge fund interest lately. There were 45 hedge funds in our database with ATUS positions at the end of the previous quarter. Our calculations also showed that ATUS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

At the moment there are a lot of methods shareholders use to appraise their stock investments. Two of the most useful methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best money managers can trounce their index-focused peers by a solid margin (see the details here).

Ken Griffin

Ken Griffin of Citadel Investment Group

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s view the latest hedge fund action regarding Altice USA, Inc. (NYSE:ATUS).

How are hedge funds trading Altice USA, Inc. (NYSE:ATUS)?

Heading into the fourth quarter of 2019, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ATUS over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

 

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners has the biggest position in Altice USA, Inc. (NYSE:ATUS), worth close to $602.3 million, comprising 8.5% of its total 13F portfolio. On Soroban Capital Partners’s heels is Citadel Investment Group, led by Ken Griffin, holding a $318.7 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism comprise Renaissance Technologies, Ross Turner’s Pelham Capital and Stuart J. Zimmer’s Zimmer Partners. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to Altice USA, Inc. (NYSE:ATUS), around 25.21% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, designating 18.15 percent of its 13F equity portfolio to ATUS.

As industrywide interest jumped, key money managers were breaking ground themselves. Thames Capital Management, managed by Jay Genzer, created the most valuable position in Altice USA, Inc. (NYSE:ATUS). Thames Capital Management had $8.2 million invested in the company at the end of the quarter. Principal Global Investors’s Columbus Circle Investors also initiated a $7.5 million position during the quarter. The other funds with new positions in the stock are Charles Davidson and Joseph Jacobs’s Wexford Capital, Sculptor Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Altice USA, Inc. (NYSE:ATUS) but similarly valued. We will take a look at Cadence Design Systems Inc (NASDAQ:CDNS), Fortis Inc. (NYSE:FTS), MSCI Inc (NYSE:MSCI), and Hess Corporation (NYSE:HES). This group of stocks’ market values are closest to ATUS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CDNS 33 1579724 5
FTS 13 561241 1
MSCI 37 643687 1
HES 36 921996 1
Average 29.75 926662 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $927 million. That figure was $3138 million in ATUS’s case. MSCI Inc (NYSE:MSCI) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Altice USA, Inc. (NYSE:ATUS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on ATUS as the stock returned 62.5% so far in 2019 (through 12/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.

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